How could the jatropha sector live on subsidies and green investments without producing oil or biodiesel?

Quote: “In less than a decade, jatropha was transformed from a promising and commercially viable biofuel crop into a green-policy parasite, living on subsidies and green investments.”

Jatropha projects have been failing to deliver what they promised, and are discussed in terms of “extraordinary collapse” (1). However, they have not been a failure for all of the actors involved. Some could earn an income through jatropha activities even without producing plants, oil seeds or oil. Instead, they responded to the opportunities that green policies have created with what we could call “trading in jatropha’s discursive commodities” (2). Awareness of these commodities requires analysis of the discursive framing of the nature of commodities that can be traded (3, p. 241). The term “discursive commodities” refers to objects of trade that do not (yet) exist in the real material world, which have obtained market value because of the narratives that science, technology, politics and business have created around them. For example, there would be no carbon-trading without the science-policy discourses that have discerned global warming and invented carbon credits (3, 4). Jatropha schemes are examples of the appropriation of nature for “green purposes”; arguments justifying the schemes refer to the environment, the global depletion of fossil fuels, and the persistence of poverty in remote rural areas.

Discursive commodities can exist because the various actors in a production network depend on each other for information concerning access to the land, labour and capital required for material production. Imagine, for example, an investor who claimed he had been assigned to find investment objects for a $100 million green energy fund, and an Indonesian businessman who claimed he had established a jatropha plantation and had access to thousands of hectares of land with secure title in an area full of underemployed land laborers. Both parties would have to trust each other because they would not have the knowledge, time or opportunity to check the other’s claims. The discursive commodities they are trading are “green capital” against “idle (but fertile) land” and “cheap labor.” Although these three commodities might exist to some extent in reality too, they are “discursive” in the global biofuel discourse and their quantity and potential is highly exaggerated.

What are the discursive commodities in the case of jatropha? Marginal lands available for jatropha cultivation (measured in thousands of hectares); high-yielding jatropha seeds; high value by-products derived from press cake; and carbon credits. These tradable objects all qualify as discursive commodities: they exist only in the science-policy discourse, which argues that they could be created in the future, and then become items or sources of high profit.

This is an example of an newspaper article about jatropha’s discursive commodities. It reports the success of a company at improving jatropha seed yields by as much as 900 percent. NYT 24 December 2013.

New “green” markets multiply and enhance the financial value of nature, and deal in, and speculate on, these new values. The environment thus becomes a business asset producing dependable incomes from the services it provides (3, p. 244), and thus attracts the interest of investors and brokers. Specifically the type of investors that are looking for new, very promising but as yet uncertain – and thus high risk – projects have been attracted to industries like jatropha biofuel production. They can be general managers of venture capital funds, or investment companies that advertise the prospects of future profits in order to gather private equity from “retail investors.” In the latter case, the private equity firm sets a fundraising target for a given investment project and goes “on the road” to attract limited partner capital (5, p. 704). One example is the investment company Aston Lloyds, which has been advertising investment opportunities in jatropha in Indonesia through a video they put on YouTube in 2009:

The script of this video is a story full of promises that are actually unproven claims about access to land, intentions to plant, the existence of a market for selling the produce, sustainability, et cetera. The claims made about jatropha production and the sustainability of production in general are not supported by results in practice (6); the claims of the company advertised through this video have been challenged in a critical study by Friends of the Earth . If all the promises in Aston Llyod’s video came true, return on investment would be high – but there is also a high risk that the claims are too optimistic. Such risk is characteristic for venture capital, which provides long-term, committed share capital, to help unquoted companies grow and succeed.

Private equity investors and jatropha project developers, independently from each other or collaboratively, construct stories about their jatropha projects, emphasizing (or exaggerating) their growth potential and profitability in the future. They use the information they have gathered creatively for constructing discursive commodities. In trading in discursive commodities they actively financialize all their claims about jatropha activities and products in a way that is characteristic of the features of the restructuring of capital on a world scale (7, p. 79). For some examples of practices in the trading of discursive commodities and the effect of such trading on jatropha projects see “What explains the non-implementation of jatropha schemes?”.